Chnages in MCA

2.After the name is approved, MGT-14 (necessary resolution for alteration of Memorandum of Association and Articles of Association (MOA and AOA) needs to be filed.

3.eForm INC-24 (Application for approval of Central Government for change of name) needs to be filed.to give effect to change in name.

Change of registered office:-

In case company has changed its registered office within local limits of the same city or place, intimation regarding the same has to be filed in Form INC-22.

Similarly, if company wishes to shift or change its registered office outside local limits of city, town or village, first eForm MGT-14 and then eForm INC-22 are required to be filed to Registrar of Companies (ROC) to give effect to such change.

In case, company wants to shift the registered office from one state to another state or from jurisdiction of one RoC to another, it needs to file following forms to give effect to such change:

1) Form MGT-14

2) Form INC-23 – File application with Central Government in Form No.

3) Form INC-28

4) Form INC-22

How can a company increase authorized capital?
A company can increase its authorized capital by filing eForm SH-7. Similarly, subscribed capital and paid up capital of the company can be increased on filing and approval of Form PAS-3 (Return of allotment of shares).

How do I intimate Ministry of Corporate Affairs about change in Object Clause of MOA?
In case a company wants to change its object clause, it can do so by filling passing necessary resolution and file eForm MGT-14.

How can a Public company convert into a Private company?
A public company can convert itself in to a private company by filing Form MGT-14 (Alteration of MOA and AOA) and then taking approval of Form INC-27.

How can a Private company convert into a Public company?
A private company can convert itself into a public company by filing Form MGT-14 for registration of such resolution passed by the company (Alteration of MOA and AOA) and filing of Form INC-27.

News

1. Income Tax Department warns salaried employees against filing wrong ITRs- Cautioning prosecution, employers also to be intimated.Press Trust of India.
2. E-Way Bill system for intra-state movement of goods wef 20.4.18 in Bihar, Jharkhand, Haryana, Himachal Pradesh, Tripura & Uttarakhand.
3. 20.04.18 is Last Day to file GSTR-5 by foreign suppliers, non-resident, GSTR-5A for non resident foreign Taxpayers, GSTR-3B Return Summary, for March , 2018.
4. GST: Procedure for interception, detention, release/seizure of goods & vehicle without e-way bill. E-way bill no. on Invoice sufficient. Its printout not must. Number available on sms or otherwise also valid. Circular 41/15/2018-GST of 13.04.2018.
5. RBI has issued a notification w.r.t Liberalised Remittance Scheme (LRS) for Resident Individuals and daily reporting of transactions. Currently, transactions under Liberalised Remittance Scheme (LRS) are being permitted by AD banks based on the declaration made by the remitter.
6. DGFT has launched of facility to check status of Importer Exporter Code (IEC) application made to DGFT by the stakeholders. As IEC is ready for Import/ Export of goods only after IEC details get successfully registered at DGFT and accepted by ICEGATE (Customs).

Goods and Services Tax (GST) is a proposed system of indirect taxation in India merging most of the existing taxes into single system of taxation.

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THE CENTRAL GOODS AND SERVICE TAX (AMENDMENT) ACT, 2018 With the approval from the GST council in the meeting held on January 10 2019, the changes made by the CGST (Amendment) Act, 2018, IGST (Amendment) Act, 2018, UTGST (Amendment) Act, 2018 and GST (Compensation to States) Amendment Act, 2018 along with the corresponding changes in SGST Acts will be applicable from 1sr February 2019. 1. Reverse charge in case of procurement from unregistered persons Sec 9(4) of CGST Act 2018 Initially as per section 9(4) of CGST Act 2018, supply of goods or services, from unregistered person to registered person, were covered under reverse charge basis. Later on vide notification no. 8/2017-Central Tax (Rate) dated 28th June2017 such reverse charge only applicable in case supply of goods and services received from unregistered person is greater than Rs. 5000 per day which again amended by notification no. 38/2017-Central Tax (Rate) dated 13th October 2017, the intra-state supplies of goods or services or both received by a registered person from unregistered person has been postponed from the central tax completely. The said provision has been extended till 30th September, 2019, vide notification no. 22/2018 – Central Tax (Rate) dated 6th August, 2018. However, with effect from 1st Feb 2019, Section 9(4) has been completely amended. Now the registered person is liable to pay tax on reverse charge basis only if following two conditions are satisfied – • Registered person is covered within the notified class; and • Registered person has received specified goods or service from the unregistered person.

With the amendment, the coverage of tax payable under reverse charge basis would be restricted. It must be noted that the notified class of registered person and the specified categories of goods and services are yet to be notified by the Government and the same would be intimated as and when notified. 2. Composition dealer allowed to supply services There are two major amendment in GST amendment act 2018 with respect to composition scheme, Earlier the threshold limit of turnover for the taxpayer to be eligible for the composition scheme is INR 1 Crore. However, after amendment with effect from 01st Feb 2019 registered person having turnover up to INR 1.5 crore can opt for composition scheme. Before 1st February 2019, Persons engaged in supply of services (other than restaurant service) are not eligible for the composition scheme or in other words person opted for composition scheme was not allowed to make supply of services. With effect from 1st February 2019, Person opting for composition scheme is allowed to supply services other than services referred in para 6 (b) of schedule II. i.e. Restaurant services. Total value of supply of services should not exceed higher of the following – • 10% of the turnover in the preceding financial year; or • INR 5 Lakhs • Rate of tax on services by composition dealer- .5% and .5%- SGST and CGST as per notification 8/2017 amended through notification 3/2019 The same can be understood with the help of following table Nature of business Before 1st Feb 2019 With effect from 1st Feb 2019 Person engaged in supply of goods Threshold limit of turnover was 1 crore Threshold limit of turnover increased to 1.5 crore Person engaged in supply of services Not eligible for composition scheme other than restaurant services Service provider are eligible for composition scheme subject to certain conditions

3. No reversal of common ITC for activities covered under Schedule III Schedule III contain list of services which will be treated neither as a supply of goods nor a supply of services. Earlier activities covered under this schedule treated as part of exempted supply and reversal of common ITC was to be made. However, with effect from 1st Feb 2019, new explanation has been inserted mentioning that the term ‘value of exempt supply’ shall not include the value of activities or transactions specified in schedule III, except those specified in paragraph 5 of the said schedule. Meaning thereby that no reversal of common input tax credit is required on activities or transactions specified in schedule III other than sales of land and sale of building (other than those specified in paragraph 5). 4. Availability of ITC on purchase, leasing, renting or hiring of Motor Vehicles, Air craft and vessels Earlier ITC on all type of motor vehicle was restricted however with effect from 1st Feb 2019, Input tax credit shall only be restricted in case of motor vehicle for transportation of persons having approved seating capacity up to 13 persons (including driver). However, such motor vehicle when put to use for following purposes, ITC would be allowed even if there seating capacity is equal to or less than 13 people. • Further supply of such motor vehicles • Transportation of passengers • Imparting training on driving, such motor vehicle.

In other words, for all the motor vehicles with approved seating capacity of more than 13 people, ITC would be allowed. In case of vessels and aircrafts, input tax credit shall be available only when vessels and aircrafts are used for following– • Further supply of such vessels or aircrafts; • Transportation of passengers; • Imparting training on navigating such vessels; • Imparting training on flying such aircrafts; • For transportation of goods. 5. Inputs tax credit on services of general insurance, servicing, repair and maintenance related to motor vehicle, aircraft and vessels From 1st February, 2019, Services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft • If ITC of Such Motor Vehicle , Vessel or Aircraft is allowed • To manufacture of such motor vehicles, vessels or aircraft • To supplier of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him 6. ITC on food and Beverages, Outdoor catering, Beauty treatment etc. From 1st February 2019, ITC on food and beverages, outdoor catering, beauty treatment etc. would be allowed in following circumstances • Only to those who provide same line of activities • If obligatory in nature to employee under any law 7. Compulsory registration for electronic commerce operator who are required to collect tax at source under section 52 Earlier Every electronic commerce operator were compulsory required to obtain registration however with effect from 1st Feb 2019 only those electronic commerce operator who are required to collect tax at source under section 52 are compulsory required to obtain registration. Section 52 of the CGST Act mandates all the e-commerce operator to collect tax at source in respect of all the taxable supplies made through it by other suppliers, wherein, the consideration in respect of all such supplies is collected by it. Which means only those ecommerce operators who works under marketplace model, compulsory registration will be applicable such as amazon, flipkart etc. 8. Multiple registration with in same state for same business. Earlier person is not allowed to take multiple registration with in same state for same business vertical. Only different verticals will be allowed to take separate registration. Now registration can be taken based on place of business. multiple registration with in same state allowed for each place of business. However, where multiple registration will be taken with in same state, each such registration shall be considered as distinct person and taxability will be applicable accordingly. 9. Suspension of GST registration until cancelled During the ongoing process of cancellation of registration, there would be temporary suspension of registration. This would result into releasing the compliance burden while the cancellation of registration is under process. 10. Issue Consolidate Debit note in place of invoice wise debit note– Earlier as per the provision of section 34 Debit and Credit Note, single debit note or credit note is issued against each invoices. With effect from 1st Feb 2019, the registered person is allowed to issue a consolidated debit / credit note in respect of the multiple invoices issued in a financial year. One to one correlation is not required. 11. Procedure for Furnishing Return and availing Input Tax Credit Section 43A has been newly inserted. This section contain provision with respect to procedure for following – • The registered person can verify, validate, modify or delete the details of supplies furnished by the supplier in the returns furnished under section 39(1). • Procedure for availing input tax credit by the recipient and procedure for furnishing the details of outward supplies by the supplier for the purpose of availing input tax credit by the recipient shall be prescribed. • The amount of tax on details of outward supplies which has been declared by the supplier will be deemed to be payable by the supplier. • The supplier and the recipient are jointly liable for payment of tax or payment of input tax credit availed in relation to the outward supplies for which details have been furnished but the return has not been furnished. • Amendment in return shall be available in new return forms and not for existing returns. 12. Revised settlement system of Input Tax credit Earlier The credit of SGST / UTGST can be utilized first towards payment of SGST / UTGST and second towards payment of IGST. NEW SECTION 49A INSERTED – As per the newly inserted section, input tax credit of IGST needs to be first utilized fully towards payment of IGST, CGST, SGST/UTGST. Once the input tax credit of IGST is utilized, the input tax credit of CGST, SGST / UTGST can be utilized for payment of IGST, CGST, SGST/UTGST. Before 1st Feb 2019, the ITC tax settlement was as per below table:

Important conditions for utilization of input tax credit • Credit of IGST should be utilized fully. Once credit of IGST is utilized only then the credit of CGST and SGST can be used. • Credit of SGST can be utilized for payment of IGST only when balance of input tax credit on account of CGST is not available for payment of IGST. 13. Receipt of payment in Indian rupees permitted for refund of ITC under GST As per the earlier provision in case of export of services, receipt has to be received in foreign convertible exchange only then such export of services will be qualified for refund of IGTS. However with effect from 1st Feb 2019, In case of services exported out of India, the receipt of payment in Indian rupees which is permitted by the RBI, qualifies as export. 14. Recovery of tax from two distinct person Explanation has been inserted which says that the word person shall include ‘distinct person’. Meaning thereby that recovery of tax can be made from distinct person present in different states / UTs. 15. Detention, Seizure and Release of goods and conveyances in transit Earlier In case the person fails to pay the tax amount and penalty as provided under section 129(1) within 7 days of detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130. From 1st Feb 2019 onwards, time limit of payment of tax amount and penalty has been increased from 7 days to 14 days. Which means that the proceedings in accordance with section 130 shall be initiated in case of non-payment within a period of 14 days of detention or seizure. 16. Transitional Arrangement of Input Tax Credit The amendment is in the form of clarification and the same is having a retrospective effect from 1st July, 2017. The clarification is as follows – • Transitional credit of only the eligible duties can be carried forward in the returns. • The term ‘eligible duty’ and the term ‘eligible duties and taxes’, provided at explanation 1 and explanation 2, does not include the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978. • The term ‘eligible duties and taxes’ does not include any cess which has not been specified in explanation 1 and explanation 2 and any cess which is collected as additional duty of customs under section 3 (1) of the Customs Tariff Act, 1975. Which means transitional credit of any type of cess is not available under GST. It is re-mentioned here that all the above points are in the form of clarification and the same are effective retrospectively from 1st July, 2017. 17. Extension in JOB WORK period EARLIER POSITION – A registered person can send inputs / capital goods to a job worker for job work purpose without payment of tax. It is mandatory that the inputs need to be brought back within a period of one year and capital goods needs to be brought back within a period of three years. AMENDMENT IN THE PROVISION – The commissioner can extend the above referred period of one year (in case of inputs) and three years (in case of capital goods) for further period not exceeding one year (in case of inputs) and two years (in case of capital goods). However, it is mandatory to provide sufficient cause for the extension. OUTCOME OF THE AMENDMENT – Type of goods Time period within which the goods needs to be brought back Maximum further extension available on sufficient cause being shown Inputs 1 year 1 year Capital Goods 2 year 2 year

18. Transportation of goods is not liable to GST when goods transported outside India from a place in India New proviso has been inserted which states that the place of supply in case of transportation of goods to a place outside India shall be the place of destination of such goods i.e. place outside India. The simple meaning / effect of the newly inserted proviso is that the transporter of goods including via mail or courier, shall not be liable to pay GST when goods are transported to a place outside India from a place in India. 19. No GST on job work services of any treatment or processes on goods imported for job work in India. As per the earlier provision, tax exemption was available in case of job work services supplied in respect of goods which are temporarily imported into India only for the purpose of repairs and the said goods are exported back after such repairs. However, amendment with effect from 1st Feb 2019 has been made to extent the tax exemption benefit in case of job work services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and the said goods are exported back after such repairs or treatment or process. Now the scope of exemption has been extended and covered all the process and treatment done good imported temporarily. 20. Ceiling on limit of amount to be deposited before filling Appeal to Appellate Authority and Appellate Tribunal Amendment has been made and ceiling on limit of amount to be deposited before filling appeal to appellate authority and appellate tribunal has been provided. The same can be understood with the help following table. Appellate Authority u/s 107 (6) 10% of the disputed tax amount subject to maximum limit of INR 25 crores. Appellate Tribunal u/s 112(8) 20% of the disputed tax amount along with the amount deposited u/s 107(6) subject to maximum of INR 50 crores ... See more

The Finance Act, 2017 inserted a new section 139AA in the Income-tax Act, 1961. With effect from July 1, 2017 this provision requires every eligible person to link the Aadhaar no. with PAN and quote the Aadhaar number in the Income-tax return. If any person does not possess the Aadhaar Number but he has applied for the Aadhaar card then he has to quote Enrolment ID of such Aadhaar application in the ITR.

The Supreme Court had already upheld the validity of Section 139AA by repelling the contention raised on Articles 14 and 19 of the Constitution of India in the case of Binoy Viswam v. Union of India [2017] 82 taxmann.com 211 (SC). However, Section 139AA was not examined in the context of privacy rights enshrined in Article 21 of the Constitution. The Supreme Court in the case of K S Puttaswamy v. Union of India writ petition (civil) no 494 of 2012 held that, though privacy is a fundamental right, yet it is not an absolute right and is subject to certain limitations. The following are the triple tests which need to be satisfied for judging the permissible limits for invasion of privacy while testing the validity of any legislation:

a) Existence of a law

b) Legitimate State interest

c) Test of Proportionality

The first requirement stands satisfied as section 139AA is a statutory provision and, therefore, there is a backing of law. Insofar as requirement of ‘legitimate State interest’ is concerned, Section 139AA seeks to safeguard the following interest:

“To prevent income tax evasion by requiring, through an amendment to the Income Tax Act, that the Aadhaar number be linked with the PAN.”

Regarding the aspect of proportionality, there was specific discussion on that aspect in Binoy Viswam’s case (supra) as well. Therefore, the provision of Section 139AA has successfully met the triple test of right to privacy.

The assessee-co., a wholesale dealer, acquired goods from various persons and immediately sold them to retail seller - WS Retail Services Pvt. Ltd. The retail seller ultimately sold those goods from e-commerce platform ‘Flipkart.Com’. To increase the volume of sale, assessee was purchasing goods, say, at Rs. 100 and selling them to the retailers at discount, say, at Rs. 80. The strategy to forego the profit had resulted in assessee-co. became a loss making company.

The Assessing Officer held that the profits foregone by selling goods at less than cost price were to be regarded as expenditure incurred in creating intangibles/brand value or goodwill. Thus, only depreciation claim could be allowed on it.

The Tribunal held in favour of assessee that one couldn’t proceed on the basis of presumption that the profit foregone would be deemed as expenditure to acquire an intangible asset, being brand value or goodwill. For creation of an intangible asset, i.e., goodwill, it is not possible to ascertain the cost of acquisition of goodwill. It was, therefore, not possible to say that profits foregone created goodwill or any other intangibles or brand value to assessee.

Since assessee did not incur any expenditure in creating intangibles, being brand value or goodwill, discounts offered by selling goods at less than cost price were to be treated as revenue expenditures and, accordingly, deduction was allowable.

The assessee claimed that gift of certain amount received from his Hindu undivided family (HUF) was exempt from tax under section 56(2)(vii). However, the Assessing Officer held that the term 'relative' in Explanation (e) to Section 56(2)(vii) does not include HUF as donor and, therefore, added the impugned amount to assessee's income under Section 68.

On further appeal, the Tribunal held in favour of revenue that as per Explanation to Section 56(2)(vii) members of an HUF are its relatives. Therefore, if HUF receives any sum from any of its member, such sum shall not be chargeable to tax. However, in vice-versa cases when member receives any sum from the HUF, same would be chargeable to tax as the term ‘relatives’ defined under said Explanation does not include HUF as a relative of such individual. The legislative intent is very clear that an HUF is not to be taken as a donor in case of an individual recipient. Thus, the assessee's plea of having received a valid gift from his HUF was rightly declined and impugned addition was to be upheld.

In the Instant case, additions were made under section 68 on the grounds that assessee had failed to show why, without any occasion, Rs. 73 Lakhs had been gifted by the maternal aunt without any consideration. The appellate authorities also upheld the action of the Assessing Officer. On further apeal, the High Court held in favour of assessee that an occasion is not necessary to accept a gift from a relative. Section 56 does not envisage any occasion for a relative to give a gift, it was almost impermissible for any authority and even for the Court to import the concept of occasion and develop a theory based on such concept.

The Court further held that when donor had given a confirmation letter that she had transferred Rs. 73 lakhs to her nephew as a gift out of natural love and affection, the AO should not have further doubted her. The donor in instant case was assessee's own maternal aunt and was covered within the definition of 'relative' defined under explanation to section 56(2)(v). Therefore, unexplained addition under section 68 with respect to gift of Rs. 73 lakh received by assessee from his maternal aunt was to be deleted.

The Applicant, MasterCard Asia Pacific, is a Singaporean company engaged in processing of electronic payments. Customers are provided with a MasterCard Interface Processor (MIP) that connects to MasterCard's Network and processing centres. Indian subsidiary owns and maintains MlPs placed at Customers' locations in India. The applicant approached the AAR to decide if it had a PE in India

The Authority for Advance Rulings held that MasterCard has a PE in India under provisions of Article 5 of India-Singapore DTAA in respect of services rendered with regard to use of a global network and infrastructure to process card payment for Customers in India. It was held that the applicant has fixed place PE, service PE and dependent agency PE in India.

The applicant was held to have a PE in India because the MIPs in India play a crucial role while facilitating the authorization of payment. AAR concluded that the preliminary verification of payment request and transmission of data, which is crucial to authorization, happens in India through MIP. These initial verification and validation of details are important and are crucial functions in the context of overall functions performed by the applicant to facilitate authorization. These functions cannot be called preparatory or auxiliary in nature.

The assessee-company was deriving its income under the head 'rental and interest income'. It acquired shares of another entity at Rs. 5 per share. The value of such shares was derived on basis of book value of assets of issuing co. in accordance with Rule 11UA of the I-T Rules. Valuation Report from a CA firm was also produced in support of claim.

The Assessing Officer was of the view that the fair market value (FMV) of the land as per the circle rate should be taken into consideration while determining the value of the shares of issuing co. Accordingly, he substituted the book value of the land with FMV of the land as per the circle rate and determined the value of shares at Rs. 45.72 per share.

The Tribunal held in favour of assessee that Rule 11UA contains the provisions for determination of fair market value of a property, other than an immovable property. Rule 11UA provides that while valuing the shares the book value of the assets and liabilities declared by the issuing co. should be taken into consideration. There is no provision in Rule 11UA as to substitute the FMV of land with its book value while calculating the FMV of shares. Therefore, the share price calculated by the assessee of issuing co. at Rs. 5 per share had rightly been determined in accordance with the provisions of Rule 11UA.

The assessee-co. was engaged as accredited domain name registrar authorized by Internet Corporation for Assigned Names and Numbers. The assessee had income from domain registration fees which was claimed to be not taxable in India. However, the Assessing Officer assessed the same as royalty, which was confirmed by the Dispute Resolution Panel (DRP). The aggrieved-assessee filed the instant appeal before the ITAT. It was submitted by assessee that it merely facilitated getting domain registered in the name of the customer who paid for availing of such services. Hence, the receipt in respect of domain name registration was not in the nature of royalty under Explanation 2 to section 9.

The ITAT ruled in favour of revenue on basis of a judgment delivered by the Apex Court in the case of Satyam Infoway Ltd. v. Siffynet Solutions (P.) Ltd. AIR 2004 SC 3540. In the instant case, the Supreme Court held that the domain name is a valuable commercial right and has all the characteristics of a trademark and, accordingly, domain names are subject to legal norms applicable to trademarks.

Thus, the rendering of services for domain registration was equivalent to rendering of services in connection with the use of an intangible property which was similar to trademark. Therefore, charges received by the assessee for said services in respect of domain name was royalty as per Explanation 2 to section 9(1)(vi).

The assessee approached a bank to obtain the credit facilities on basis of books of account prepared by a firm of Chartered Accountants. Subsequently, different financial statements were presented before Income-tax Dept. which were audited by another Chartered Accountants Firm. The financials for Income-tax purposes were not commensurate with what was reflected in the books of account presented before Bank. The Assessing Officer made additions due to difference in two audited balance sheets.

The High Court held in favour of revenue that once assessee presents the financial statements, as certified by a Chartered Accountant, for obtaining bank loan, he can’t subsequently backtrack from such position at the time of filing annual accounts for purpose of taxation. The assessee can’t argue that that earlier accounts had been prepared on estimation basis for presentation thereof to bank.

When financial statement of an assessee is accompanied by a certificate as to its fairness, it couldn’t be tailor-made to suit a particular purpose or window-dressed to make it attractive for bankers to rely thereupon. Thus, it was open to the Assessing Officer and income tax authorities to pin assessee down on basis of assessee's representation contained in earlier balance-sheet and make additions.

The Assessee, Mr. Sachin Tendulkar, owned two properties in Pune – Flat S and Flat T. Flat T was let out, however, Flat S was vacant for the whole year as suitable tenant couldn’t be found. He claimed that the said flat had remained vacant throughout the year despite his reasonable effort to let out the same. In this regard, he submitted three letters written to the builder. In first letter, he thanked the builder for identifying the tenant for the flat at Flat T and also requested to identify tenant for Flat S. Subsequently, the assessee had written second letter and after that third letter being reminders for identifying the tenant to let out Flat S.

Therefore, he claimed vacancy allowance under Section 23(1)(c) for Flat S and declared nil income. During the course of assessment proceedings, the Assessing Officer made additions for the notional rental income from Flat S, which was also upheld by the CIT(A).

The ITAT held in favour of assessee when same builder had helped the assessee to find tenant for another flat, it couldn’t be said that these letters to the same builder to help him identify one more tenant, to be considered as fake, defied logic. Therefore, if a property was held with an intention to let out in the relevant year coupled with efforts made for letting it out, the same would fall within the purview of section 23(1)(c).

The assessee-company entered into a development agreement by virtue of which a right in land was created in its favour by owner of land. Assessee's case was that despite development agreement entered into by landlord, the landlord had decided to sell said land to other parties. The assessee filed a suit in the Courts of law for specific performance of pre-emptive right to purchase the land. Later on, it received damages from the potential purchaser for relinquishment of 'right to sue' in the Courts of law for breach of development agreement. The assessee claimed that 'right to sue' was a personal right which would not fall within sweep of definition of 'capital asset' under section 2(14). Consequently, damages received from potential purchaser were treated as non-taxable capital receipts.

The ITAT held in favour of assessee as under:

The essence of long list of judicial pronouncements cited by assessee was that section 6 of the Transfer of Property Act which uses the same expression 'property of any kind' in the context of transferability makes an exception in the case of a mere right to sue. The decisions thereunder make it abundantly clear that the 'right to sue' for damages is not an actionable claim. It cannot be assigned. Transfer of such a right is opposed to public policy as it tantamount to gambling in litigation.

Hence, such a 'right to sue' does not constitute a 'capital asset ' which, in turn, has to be 'an interest in property of any kind'. Despite the definition of expression 'capital asset ' in the widest possible terms in Section 2(14), a right to a capital asset must fall within the expression 'property of any kind' subject to certain exclusions.

Notwithstanding widest import assigned to the term 'property' which signifies every possible interest which a person can hold and enjoy, the ' right to sue' was a right in personam and such right could certainly not be transferred. In order to attract the charge of tax on capital gains, the sine qua non is that the receipt must have originated in a 'transfer ' within the meaning of section 45, read with section 2(47) of I-T Act. In the absence of its transferability, damages received by assessee couldn’t be assessed as capital gains.

The Bombay High Court held that it is primary duty of the Assessing Officer to apprise the Counsel about all facts involved in matter, more particularly facts which may have surfaced after passing of impugned order of Tribunal so as to avoid unnecessary delays in disposing of cases pending before Court. Officers of revenue should not believe that once matter is in Court, it is sole responsibility of revenues counsel to protect the interest of State.

Thus, it is appropriate to suggest to CBDT to consider holding of a training programme, where leading advocates could address domain-expert on ethics, obligation and standard expected of advocates before they start representing State. It would ensure that revenue is properly represented to serve greater cause of justice and fair play.

The assessee-co. was engaged in business of manufacture of bulk drugs. It also derived income from growing mushroom and treated it as agriculture income exempt from tax under Section 10(1). The Assessing Officer disallowed the exemption on the contention that growing mushrooms is not an agriculture operation. He contended that mushrooms are produced under 'controlled conditions' in racks placed on shelves above land. Hence, the activity was not an agricultural activity.

The assessee-co. raised the following issue before special bench of ITAT:

‘Whether income from production and sale of Mushrooms could be termed as 'agricultural income' if instead of horizontal use on soil, vertical space was used?’

The ITAT special bench held in favour of assessee as under:

'Soil' is a part of the land. Land is also part of earth. The upper strata of the land is soil and this is cultured and made fit for production of crops, vegetables and fruits, etc., by enriching the soil. When such soil is placed on trays, it does not cease to be land and when operations are carried out on this ‘soil’, it would be agricultural activity carried upon land itself.

For the purpose of understanding the nexus between an agricultural operation and an agricultural land, what needs to be inferred from the term 'land' is that, the cultured top layer of the earth, which is fit for any sort of cultivation, is land for this purpose. Hence, the soil which was placed on the vertical space above the land in trays was also land and the income arising from the sale of Mushrooms was agricultural income exempt from tax.

The petitioners filed a writ in the Delhi High Court to seek directions that I-T Dept. should allow filing of Income-tax return (ITR) without complying with the condition of providing Aadhaar Number.

Section 139AA of the Income-tax, Act 1961 requires every eligible person to quote his Aadhaar number in the ITR. If any person does not possess the Aadhaar Number but has applied for the Aadhaar then he can quote Enrolment ID of Aadhaar application Form in the ITR. This provision also requires the linking of Aadhaar number with PAN of the taxpayer[ The CBDT vide order [f.no.225/270/2017/ita.ii], dated June 30, 2018, extended the last date for linking of Aadhaar number with PAN till March 31, 2019.].

Petitioners argued that, though CBDT had provided relief to taxpayers by deferring last date to link their Aadhaar number with PAN, yet no such relief was provided in case of filing of ITR. Quoting of Aadhaar number or Enrolment ID of Aadhaar application form in I-T return is mandatory to file ITR online. E-Filing portal of Income-tax dept. doesn’t accept any return if Aadhaar number isn’t mentioned in ITR.

Various High Courts had also allowed taxpayers to file their Income-tax returns manually without furnishing the Aadhaar number or enrolment ID of Aadhaar application form. Thus, they should be permitted to file their returns for the Assessment Year 2018-19 without furnishing Aadhaar in ITR.

Considering the issue, the Delhi HC issued directions to the CBDT to issue appropriate directions and to create a platform by amending the digital forms or substituting them properly to enable ‘opt out’ option from the mandatory requirement of furnishing Aadhaar Number for the duration till the exemption subsists, i.e., till 31-03-2019.

Subsequent to the directions issued by the Delhi High Court, the Income-tax Dept. updated the ITR utilities and e-filing platform which enabled the taxpayer to file the return without furnishing the Aadhaar or Enrolment Id.

During the assessment proceedings, the Assessing Officer noted that the assessee had sold immovable properties and earned long-term capital gains. The assessee submitted that he had only signed the documents by virtue of Power of Attorney (POA) executed by Mr. A and Mr. B, the original vendors of such sale transactions who were Non-resident Indian.

The Assessing Officer concluded that as assessee failed to furnish the residential address of the vendors and vendors didn’t file returns of income, he shall be considered as owner of the properties. Accordingly, the assessee was held liable to be taxed on the capital gain arising from sale of these properties.

On further appeal, the ITAT held in favour of assessee. It held that the copy of purchase agreement, power of attorney and sale deeds produced before AO, mentioned nowhere that the assessee was the real owner of the property or the consideration had been received by him. The residential address of the actual vendors was also mentioned in the Sale Deed as well as in the Power of Attorney. In spite of information about the residential address of real owner, the AO had not taken any initiative to make an enquiry with an intent to impose tax on capital gain upon them. Instead of doing so, he made the assessee liable for payment of tax. Therefore, as the properties didn’t belong to the assessee, capital gain arising from those properties couldn’t be taxed in his hands solely on the ground that the person being the real owners hadn’t filed their income-tax returns.

The assessee, Mrs. Shilpa Shetty, was resident of India and was engaged in film acting and had also acted as a brand ambassador for various products. A share purchase agreement (SPA) was signed by the shareholders of EMSHL, a Mauritian company, to transfer a portion of the shareholding to Kuki Investments Ltd. (Kuki) represented by Raj Kundra and under the same SPA, Kuki was also to subscribe additional shares to be issued by company EMSHL.

Assessee was neither a buyer nor a seller of shares of EMSHL in SPA. However, under SPA, she undertook to provide brand ambassadorship services without charges to Jaipur IPL Cricket Private Limited (JICPL), an Indian Company that was a 100 per cent subsidiary of EMSHL, in relation to promotional activities of 'Rajasthan Royals', an IPL cricket team owned by JICPL. The AO held that there was a deemed 'international transaction' between assessee and JICPL, therefore, adjustment should made in assessee's income on basis of ALP.

The ITAT held in favour of assessee that Section 92B(2) deems a transaction between two non-AEs as 'international transaction' if there exists a prior agreement in relation to the relevant transaction between one of the non-AE’s and AE of an assessee. Section 92B(2) couldn’t be applied to hold that transaction between assessee and JICPL was an 'International transaction' as neither of the parties to the SPA was an AE of the assessee nor JICPL had entered into a prior agreement with AE of assessee (JICPL was not a party to SPA). Thus, in absence of a prior agreement between non-AE and AE of an assessee, no adjustments could be made.

Shares held by the assessee, Mr. Jackie Shroff, in a company were sold due to forged signature by another person. Assessee filed a criminal complaint before the Economic Offences Wing. After filing of complaint, the accused came forward for amicable settlement of dispute and a settlement deed was executed in order to settle the dispute. As per the terms of settlement deed, assessee received Rs. 6.97 crores as compensation in lieu of withdrawing the criminal complaint.

Assessee treated said compensation as capital in nature and did not offer it for taxation at the time of filing of return. However, during assessment proceedings, the Assessing Officer treated the compensation as income and added it to income of assessee.

The Mumbai ITAT held in favour of assessee that the compensation received by the assessee was not for his professional activities but for settlement of dispute between him and some other party resulting in filing of a criminal complaint. The amount received towards compensation could not fit in to the definition of income as per section 2(24), read with section 4 of the Income-tax Act, 1961.

The Bombay High Court in the case of CIT v. Amar Dye Chem Ltd. [1994] 74 Taxman 254 also held that the amount received towards compensation or damage for settlement of dispute was capital receipt which was not taxable. Thus, compensation received by assessee for withdrawing criminal complaint was a capital receipt and couldn’t be treated as income.

The assessees, Mr. Rahul Gandhi and Mrs. Sonia Gandhi, extended a loan to the National Herald to write off the accumulated debts and recommence the newspaper publication. The said loan was assigned by the assessee to a newly incorporated non-profit company ‘Young India’ (YI) and in lieu of that they were allotted shares of YI. However, in Income-tax returns, they failed to pay tax on the shares allotted by Young India. The assessees argued that the allotment of shares did not trigger any taxing event. It was also argued that since they were shareholders of a non-profit and charitable company, they were under no obligation to disclose the value of shares.

The High Court held in favour of revenue that sub-clause (ii) of clause (c) of Section 56(2) provides that if certain shares or property are acquired at a price which is less than its aggregate fair market value by an amount exceeding Rs. 50,000, the fair market value as reduced by the considered paid shall be charged to tax. In the instant case, the assessee bought the shares at Rs. 100 per share which could not be deemed as its fair market value. The assesse had nowhere disclosed the fair market value of such shares and had not recorded the facts relating to above taxing event. Further, it couldn’t be held that the individual was exempted altogether from disclosing her or his interest in the acquisition of shares merely because shares were of not-for-profit Company. Therefore, the AO was justified in reopening the cases.

The assessee, UBER India, was providing marketing and support services to a Dutch company, Uber BV. It was collecting payments on behalf of said company and making disbursements to driver-partners as per directions of Uber BV. A survey was conducted at the registered office of assessee-co. and it was observed that assessee had not complied with provisions of section 194C on pay-outs to Driver-Partners. Accordingly, the assessee was treated in-default and a demand notice of Rs. 24.92 crores and Rs. 84.13 crores for assessment years 2016-17 and 2017-18 were raised and penalty proceedings initiated. The assessee denied his liability to deduct TDS under section 194C on ground that it was not a 'person responsible for making payment' to Driver-Partners as contract was between Uber B.V. and Driver-Partners. It filed an application before ITAT for stay of demand.

The Mumbai ITAT held in favour of assessee. The ITAT referred to the submission made by the assessee as to its modus operandi of collecting the payments on behalf of the Dutch company, which were made by way of debit or credit cards or collected by the Driver-Partners directly from the customers. It was stated that there were practical difficulties as it was not possible for the assessee to collect TDS on the cash payments received by the Driver-Partners directly. Since the assessee had proved that the facts of the case were not properly and thoroughly examined and verified by the lower authorities. Demand raised by the revenue had to be stayed subject to deposit of Rs. 20 Crore till the disposal of appeal by the tribunal so that the business of the assessee was not adversely impacted.

The assessee-company had only two shareholders 'S' and her husband. On passing away of husband, his shares devolved on their daughter 'V'. The assessee proposed to acquire an immovable property at approximately Rs. 23.09 crores. 'S' brought in money into the company in lieu of allotment of fresh 10,100 shares with a share premium of Rs. 23.31 crores.

The Assessing Officer opined that company had received excess price/share premium for the shares allotted to 'S' over and above the face value of shares. Accordingly, he brought Rs. 23.31 crores to tax in the hands of the company under Section 56(2)(viib).

The ITAT held in favour of assessee as under:

When 'S' introduced money into the company for allotment of shares at an exorbitant premium in contrast to its intrinsic value of just Rs. 10 per share, the benefit of such investment had only passed on to her daughter because there were only two shareholders in the company at that point of time. Had 'S' gifted the money to her daughter 'V' and thereafter if daughter had brought the same into the company for allotment of equity shares at face value, question of invoking of the provisions of section 56(2)(viib) would not have arisen.

Provisions of section 56(2)(viib) couldn’t be invoked in the case of the assessee-co. because by virtue of introducing cash in the company by 'S' for allotment of equity shares with unrealistic premium the benefit had only passed on to her daughter 'V' and there was no scope in the Act to tax when cash or asset was transferred by a mother to her daughter.

The assessee, Mr. Shah Rukh Khan, had received a villa at Dubai as gift and offered an amount of Rs. 14 lakhs as the notional income of the villa for tax in his return of income for the year under consideration. During the course of assessment proceedings, assessee claimed that Article 6 of India-UAE tax treaty doesn’t expressly recognize the right of the resident State to tax the income from immovable property situated in the source State. Therefore, the notional income of the villa owned by him in Dubai could not be subjected to tax in India.

The ITAT held that claim raised by the assessee being clearly backed up by a bonafide belief on his part that the notional income of the villa was not liable to be taxed in India, no penalty for concealment of income could be validly imposed on the assessee.

The Applicant, Tech Mahindra, had offices in Sydney and Melbourne through which it provided software products and information technology services to entities in Australia. Payments received by applicant for the services provided in Australia by the employees located in India were treated as ‘Royalties’ as per Article 12(3)(g) of the Australia-India DTAA .

Applicant argued that, though Australia was allocated the right to tax the ‘Royalties’ by the Indian Agreement but it could only exercise that right if it had the right to impose tax on those amounts under Australia’s domestic law. As of now, the domestic law does not give any right to Australia to tax such income.

The Federal Court of Australia held as under:

The language of Article 23 should be given effect to according to its terms and the context. Article 23 provides that that income derived by a resident of one contracting States may be deemed to be income from sources in other contracting state for purpose of law of that other State. Therefore, royalty income was to be included in the applicant’s assessable income because it was income from an Australian source by reason of Article 23 of the Australia-India DTAA. The Court rejected the argument that the tax treaties can only be used as shields not swords. It held that the tax treaties also provide standalone taxing power and independent imposing of tax to a particular income.

The Madras High Court held that the foreign assets in the instant case were acquired with money that was disclosed in the books of account of the assessee and that was remitted through banking channels. There was no allegation of black money or unaccounted money or money that had escaped tax or money that was remitted through illegal channels. It was not disputed by the Income-tax department that the source of investment was tax paid money remitted through banking channels in accordance with schemes approved by the RBI. Further, foreign assets were disclosed in Schedule FA in Original/Revised return of income. Therefore, the offence under section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 was not tenable.

The assessee, Sushmita Sen, received a sum of Rs. 145 lakhs from Coca Cola India Limited. Out of total sum, she offered to pay tax only on Rs. 50 Lacs and claimed that balance Rs. 95 lakhs was capital receipt. She claimed that Rs. 95 lakhs represented the compensation received towards damages caused to her reputation.

The Mumbai ITAT held that compensation received by the assessee was not income liable to tax. Though she had received total amount of Rs. 145 lacs in lieu of settlement for breach of terms of celebrity engagement contract, yet only an amount of Rs. 50 lakhs was due to assessee under the contractual terms, and additional amount of Rs. 95 lakhs did not arise out of exercise of profession. Rs. 95 lacs was received towards damages arising out of her being sexually harassed by CCIL employee, disparaging her professional reputation by false allegations and for the repudiatory breach of contract by CCIL. Such compensation could not be termed as any benefit, perquisite arising to assessee out of exercise of profession, hence, it couldn't be construed to be assessee's income either under section 2(24) or under section 28.

The appellant was employed in a College run by a Trust. He received Rs. 50 thousand as advance salary from the said trust. The appellant deposited entire amount in his bank account, which was subsequently withdrawn by him and used for own purposes.

The Initiating Officer (IO) assumed that Chairman of trust had forced employees to distribute, deposit and retain their own money in demonetized currency in guise of loan received, which had to be repaid after some time in new currency. Thus, IO held chairman of college as beneficial owner and appellant as benamidar and passed order provisionally attaching bank account of appellant.

The Appellate Tribunal held in favour of appellant as under:

Every cash transaction couldn't be termed as a 'benami' transaction. As per section 2(9) of Benami Act the following twin conditions are needed to be satisfied to construe any transaction as benami: (1) the property being held by a person who has not provided the consideration, (2) the property is held by that person for the immediate or future benefit, direct or indirect of the person who has provided the said consideration.

The characteristic of a 'benami' transaction is that there must be a mere lending of name without any intention to benefit the person in whose name it is made, i.e., a mere name lender. The mischiefs sought to be punished by the Act are only such transactions which have a name lending element without deriving any benefit therein, i.e., 'benami' transactions.

The transaction where cash was paid to person in lieu of a future promise couldn't be a 'benami' transaction, as there was no lending of name. There could be no 'benami' transaction if the future benefit was due from the person who was also the holder of property.

The impugned order was not sustainable as it intended to punish the appellants for wanting to defeat the purpose of demonetization and was beyond the purview of the Act.

The assessee, Priyanka Chopra, had entered into agreement with NDTV for promoting the causes of environmental issues in association with Toyota. She was given a Toyota Prius hybrid luxury sedan car for being the brand ambassador of NDTV-Toyota Greenathon Campaign. The Assessing Officer taxed the market value of such car in the hands of assessee as business income under section 28(iv). However, the assessee contended that the remuneration received against her services as brand ambassador had been offered to tax in the year of receipt. Since she didn’t render any services to Toyota Company, the value of the car given to her for promotional purpose couldn’t be taxed in her hands.

The Mumbai ITAT held in favour revenue that assessee had done the promotional activity by rendering the services as a brand ambassador of NDTV Toyota Greenathon Campaign, which had also promoted the brand of Toyota. Therefore, value of Toyota car in this connection had rightly been added in her hands under Section 28(iv). Further, the argument that there was no agreement between Toyota and the assessee was totally irrelevant and unsustainable. ... See more

The summary of top 25 cases on GST reported by Taxmann is given below:

1. Supply of food and beverages in trains to be considered as supply of ‘Goods’: AAR: [Deepak & Co., In re. - [2018] 93 taxmann.com 94 (AAR - New Delhi)]

The assessee was engaged in supply of food and beverages to the passengers in trains as per the menu and tariff approved by the Indian Railways. It contended that the supply of any food or beverage should be taxable at 5% if they are consumed on or away from the premises. It filed an application for advance ruling for the same.

The Authority for Advance Ruling held that the train is a mode of transport and cannot be called as a restaurant, eating joint, mess or canteen, etc. Therefore, the supply of goods, i.e., food, bottled water, etc., should be charged to GST on the value of individual items at the applicable rates as there is no element of service in it.

The applicant, a NBFC is engaged in providing various types of loans to the customers, such as auto-loans, loans against the property, personal loans, consumer durable goods loans, etc. It has entered into agreements with borrowers/customers for providing loans to them. The loan agreements provide for repayment of the outstanding dues/EMI through cheque/ECS/NACH or any other electronic or clearing mandate. In case of dishonouring of payment instrument or instruction, the applicant collects the penal or bouncing charges. The applicant filed an application for Advance Ruling whether the bouncing charges should be treated as supply? It contended that bouncing charges collected from the customers are in the nature of penalty or liquidated damages. Therefore, same are not considerations for supply of services and, hence, not subject to GST levy.

The Authority for Advance Ruling held that the receipt of cheque bouncing charges on dishonouring of cheques would be receipt of amounts for tolerating the act of their customers it dishonouring of cheque. Therefore, it would be treated as supply under GST as per S. No. 5(e) of Schedule II of the CGST Act, 2017 and, hence, taxable under the GST Act.

The applicant was engaged in providing various types of loans to customers. The applicant received penal charges on delayed payment of EMIs of loans. The applicant filed an application for advance ruling to determine whether penal charges on delayed payment of EMIs of loans would be considered as supply?

The authority observed that penal charges on delayed payments would be considered as receipt of amounts for tolerating an act of their customers for having delayed/defaulted on their EMI payments within due dates. The amount received as penal charges would not be considered as additional interest and, therefore, was to be treated as ‘supply’ under the GST Act. Therefore, penal Interest on default in EMI payment would be taxable under GST.

The assessee filed an application for Advance Ruling on whether the sale of spiritual products such as books, DVDs, etc., could be treated as supply as per GST Act? It contended that the money earned from such goods was used for main object only, i.e., for charitable and religious purposes. Therefore, such an activity could not be treated as an activity of carrying out business.

The Authority for Advance Ruling held that there was no specific exemption to registered charitable trusts for supply of such goods under GST. The sale of spiritual products which was incidental or ancillary to main charitable object of assessee could be said to be business. Therefore, the sale of spiritual products could be treated as supply under the GST Act and GST would be applicable on it.

The assessee has manufacturing units. It intends to sell one unit along with all its assets and liabilities for a lump sum consideration. It filed an application for Advance Ruling on the following two issues.

1.Whether such transaction would be deemed as supply of goods or supply of services or both?

2.Whether such transaction would be exempt under S. No. 2 of the Notification No.12/2017-Central Tax (Rate), dated June 28, 2017?

The Authority for Advance Ruling held that the business will continue in new hands. Hence, such transaction would be in the nature of a going concern. When the business is transferred as a going concern, then it does not amount to supply of goods as per part 4(c) of the Schedule II of the Central GST Act. Further, the column no. 3 of the Table in the Notification No. 12/2017-Central Tax (Rate) gives the description of the services. Therefore, such transaction would be treated as ‘Supply of service’ and, hence, would be exempt from GST as per S. No. 2 of the Notification No.12/2017-Central Tax (Rate), dated June 28, 2017.

The assessee provided recruitment services to the students seeking admission in foreign universities and the consideration for such receives was received in convertible foreign exchange from such foreign universities. It filed an application for advance ruling to decide if such services should be treated as an export of service. The applicant contended that as per Section 13(2) the place of such supply should be deemed to be outside India as location of service recipient is outside India.

The Authority for Advance Ruling (AAR) held that such services would be provided only as a representative of the University and not as an independent service provider. Being an intermediary service provider, the place of supply shall be determined as per section 13(8)(b) of the IGST Act and not under section 13(2) of the IGST Act. Therefore, the place of supply shall be the location of service provider. As the condition for export of service was not satisfied, the assessee's service to the foreign universities would not qualify as ‘Export of Services’. Hence, such service would be taxable under the GST Act.

As per Section 2(13) of IGST Act, ‘Intermediary’ means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.

Combo Module - Income Tax & GST

7. Supply of food items to employees for a consideration in canteen run by co. is taxable under GST: AAR: [Caltech Polymers (P.) Ltd., In re - [2018] 98 taxmann.com 355 (AAAR-Kerala)]

The applicant-company was engaged in manufacturing and sale of footwear. It was providing canteen services exclusively for the employees. It incurred the canteen running expenses for a month and recovered the same from its employees without any profit margin. The applicant submitted that the service provided to the employees was not being carried out as a business activity and it was rendered by virtue of provisions of Factories Act, 1948. Therefore, the applicant is of the view that this activity would not come under the scope of Supply.

The Appellate Authority for Advance Ruling observed that the applicant recovers the amount from employees. Therefore, the supply of food items to the employees for a consideration in a canteen run by the appellant would come under the definition of 'supply' as per the GST Act.

The petitioner is one of the co-owners of a jointly owned immovable property. There are 13 co-owners holding equal share of land and building. They had rented out these properties to different parties. The total rent from all these properties exceeds Rs. 20 lakhs in a financial year. But the individual share is not exceeding the threshold limit. It filed an application for Advance Ruling whether small business exemption would be available to all owners separately in case of joint owned property?

The Authority for Advance Ruling held that when the rent is collected together and divided equally between respective co-owners, then the small business exemption for registration under GST is available to co-owners separately.

The applicant filed a writ petition in the Madras High Court for inclusion of petrol and diesel under the ambit of GST to ensure ‘One Nation One Tax’. The applicant pleaded that the prices of petrol diesel and other essential goods will come down after its inclusion in GST.

The High Court held that it wasn’t entrusted with the power to issue any directions to the Government for inclusion of petrol and diesel under GST. It was only the prerogative of Central Government to act on the recommendations of GST council for its inclusion under GST.

The assessee received an order from a customer in USA for the supply of spices. It placed a corresponding order with a Chinese supplier, who shipped the goods directly to the customer in the USA. The Chinese supplier raised an invoice on the assessee and assessee raised the invoice on the customer in the USA. The assessee filed an application for advance ruling to determine if GST is leviable on sale of goods to the USA Company, when such goods would be shipped directly from China to the USA without entering India.

The Authority for Advance Ruling (AAR) held that the goods are liable to GST when imported into India. As goods are not imported into India at any point of time, the assessee is not liable to pay IGST on the sale of goods procured from China and supplied to the USA.

The assessee filed an application before the Standing Committee alleging the profiteering practice of Honda car dealer. He stated that he had entered into a contract to buy a Honda Car through an authorized Honda car dealer for Rs. 9.13 lakhs, which included excise duty (35%), CST (2%) and UP VAT (14%), i.e., in aggregate the tax was 51%. He took the delivery of the Car in the GST regime by paying an amount of Rs. 8.99 lakhs. He alleged that the dealer had not given the benefit of reduced rate of tax, which was 29% in GST regime. Thus, such practice should be treated as profiteering and, hence, the action should be taken against the dealer.

The Anti-profiteering authority referred the matter to the Director General of Safeguards (DGSG). The DGSG in his report found that in old regime, the tax incidence was 31.25% instead of 51%. Hence, the contention of assessee was incorrect. The National Anti-profiteering Authority (NAA) held that the benefit of Rs. 10,550 on account of reduction of tax by 2% (reducing tax rate from 31.254% (pre-GST) to 29% (post-GST)), had already been passed on to the assessee. Therefore, no additional benefit on account of availment of ITC by the car dealer was required to be passed on to the customer. Thus, the contention of the assessee was not valid and was to be rejected.

The Authority seized the goods of the assessee on the grounds that the tax invoice was kept in a sealed envelope and the goods were transported without E-way Bill-02. It also issued a notice to the assessee for imposition of penalty. The assessee filed the writ petition in the High Court against the same.

The High Court held that the E-way Bill-02 had been generated in favour of the assessee on March 26, 2018 at 11.50 am but the seizure order had been passed on March 27, 2018 at 6 pm. Therefore, there was no justification in the impugned seizure order. Hence, the seizure order as well as show cause notice were to be quashed.

13. Credit of GST paid on sanitary fittings not available as it is an integral part of building: AAR: [Bahl Paper Mills Ltd., In re- [2018] 94 taxmann.com 70 (AAR- Uttarakhand)]

The assessee filed an application before the Authority for Advance Ruling on the issue ‘whether credit will be available for the GST paid in respect of office fixtures and furniture, AC plant and sanitary fittings installed in a new building constructed for furtherance of business and which would be capitalized in books of account.?’

The Authority for Advance Ruling held that the input tax credit (ITC) of GST paid in relation to building or any other civil structure is not available. The sanitary fittings are integral parts of building or any other civil structure. Therefore, the ITC of GST paid on such sanitary fittings is not available. However, the credit of GST paid in respect of office fixtures & furniture, AC plant is admissible if registered person doesn’t claim depreciation on the GST component under the Income-tax Act.

The assessee is a tenant in building premises. The owner of said building premises entered into an agreement with a developer for redevelopment of said premises. Consequent to the said agreement, the assessee is to vacate the premises to facilitate the redevelopment of the building. The assessee filed an application for Advance Ruling for applicability of GST on the compensation received by it for facilitating an alternative accommodation for the tenant and for delay in delivery of possession of the new premises.

The Authority for Advance Ruling held that as assessee agrees to do an act, i.e., vacating the premises to facilitate the supply of service by the developer to the owner, the compensation received from the developer for vacating the said premises shall be subject to GST. Further, the amount received for delayed possession of new premises would be a receipt for tolerating the construction-cum-redevelopment work and for tolerating an act of not completing the re-development work within the prescribed time. The same would be covered under the definition of 'supply' and, therefore, the GST would be leviable on the said amount.

The assessee is a manufacturer of ‘Rakhis’ including decorative and designer rakhis. These rakhis consist of cotton thread, zari thread, silk thread, plastic beads, coloured stones and rudraksha. It filed an application for Advance Ruling on the classification of Rakhis. It contended that rakhis should be considered as handicrafted goods.

The Authority for Advance Ruling held that ‘Rakhi’ is an independently identifiable product which is made of many materials. The material which provides the essential character to rakhi varies. Therefore, the ‘Rakhis’ have to be classified according to the constituent materials used in it. Further, the GST exemption under Notification No. 2/2017- Central Tax (Rate), dated June 28, 2017 is not available for rakhis.

The CBIC has also clarified through FAQs dated July 20, 2017 that the rate of GST shall be nil in respect of following:

1.Puja samagri, including kalava (raksha sutra)

2.Rakhi, which is in form of kalava [raksha sutra]

Any other rakhi would be classified as per its constituent materials and attract GST accordingly.

Section wise case book on Judgments & Decisions of Income tax Appelate Tribunal

The assessee is the liaison office of a company incorporated at Netherlands. It doesn’t undertake any activity of trading, commercial or industrial in nature, except activities required for normal functioning of office. The salaries of the employees are remitted by HO to liaison office. The HO also reimburses other expenses incurred by liaison office for its operation.

The assessee filed an application for Advance Ruling on the issue ‘whether reimbursement of expenses and salary is liable to GST and whether it is required to get registered under the GST?

The Authority for Advance Ruling held that the liaison office in India does not render any consultancy or other services directly or indirectly. Therefore, the reimbursement of expenses and salary paid by head office to liaison office is not liable to GST. Further, as no taxable supplies are made by the liaison office, they are not required to get registered under GST.

The assessee wanted to carry forward the accumulated credit of Krishi Kalyan Cess (KKC) shown in service tax return as on June 30, 2017 to the electronic credit ledger under the GST Act. It filed the application for Advance Ruling regarding admissibility of KKC as input tax credit under the GST Act. The Authority for Advance Ruling (AAR) held that the ITC of KKC could not be carried forward under GST. The assessee filed an appeal against the order of AAR before the Appellate Authority on the ground that KKC is subsumed in the CGST Act and it does not have any independent identity as KKC. Therefore, it should be allowed as credit under the transitional provision.

The Maharashtra Appellate Authority for Advance Ruling (AAAR) held that cess and duty are separate levies and cannot be equated. The credit of KKC can only be utilized for payment of KKC only. Further, the FAQs issued by CBIC have clarified that ITC of KKC cannot be carried forward under GST. Accordingly, it upheld the order of AAR.

18. Supply of UPS along with battery should be considered as ‘Mixed Supply’: AAR: [Switching Avo Electro Power Ltd., In re - [2018] 96 taxmann.com 106 (AAAR-West Bengal)]

The assessee filed an application for Advance Ruling to determine whether supply of UPS along with battery has to be considered as mixed supply as they are supplied under a single contract at a combined single price? It contended that UPS cannot function without battery because it is an integral part of UPS. Hence, it is naturally bundled and such supply should be treated as a composite supply and not as a mixed supply.

The Authority for Advance Ruling held that the storage battery has multiple uses and can be put to different uses. Therefore, when battery is supplied with UPS, then it can not be considered as a composite supply or a naturally bundled supply.

19. Supply of Goods by Cafe Coffee Day to SEZ units will not be treated as Zero rated supply: [Coffee Day Global Ltd., In re- [2018] 96 taxmann.com 247 (AAR- Karnataka)]

The applicant, Café Coffee Day, is engaged in supply of non-alcoholic beverages to SEZ units using coffee vending machines. It contended that all supplies to SEZ, without any distinction, to be treated as zero-rated supplies. The applicant is of the view that the supplies made by CCD to the SEZ units are in the nature of zero rated supplies, notwithstanding fact that they are not used for authorized operations.

The Authority for Advance Ruling observed that IGST ACT provides same meaning to SEZ which is assigned to it in the Special Economic Zones Act, 2005. SEZ Act also provides that the operations to be carried out in the Special Economic Zone and also in the units located therein have to be in accordance with the authorization to be given by the Central Government. It is also observed by the AAR that the rule relating to refund under GST Act stipulates that the supply, in respect of which tax has been paid and refund is sought, shall be necessarily for authorized operations. Therefore, it is decided that the supply of non-alcoholic beverages/ingredients, to SEZ units using coffee vending machines by the applicant, would not qualify as zero rated supply.

20. GST to be levied on activities done by employees of corporate office for its units located in other states: [Columbia Asia Hospitals (P.) Ltd., In re- [2018] 96 taxmann.com 245 (AAR-Karnataka)]

The employees of corporate office performed the activities in the course of or in relation to employment. The same activities are also performed for the units located in the other States. The assessee filed an application for Advance Ruling whether GST would be applicable on supplies made to other units located in other States by employees of corporate office?

The Authority for Advance Ruling held that the services provided by the employees to the employer, the corporate office, have the nature of the employee and employer relationship. The corporate office and the units are distinct persons. Therefore, activities performed by employees of corporate office for other units of company shall be treated as supplies as per Entry 2 of Schedule I of the CGST Act. Hence, GST would be applicable even if made without consideration.

The Applicants, 100+ home buyers, filed an application against the builder before the Haryana State Screening Committee for not passing on the Input Tax Credit (ITC) of the GST paid on construction services. They booked flats under the Haryana Affordable Housing Policy 2013 and paid Excise Duty and Value Added Tax (VAT). After the GST roll-out, 12% tax was levied on the construction service which was further reduced to 8% from January 25, 2018. But the benefit accrued to the builder post-GST had not been passed on to the flat buyers.

The National Anti-profiteering Authority (NAA) said that the concession given on construction services had impacted the tax revenue of Govt. and this step had been taken so as to reduce the prices charged by the builders from the vulnerable sections of society who could not afford high value apartments. The NAA held that the builder had to reduce the price of the flat to be recovered from the buyers. It also issued the show cause notice so as to levy the penalty on the builder.

The assessee filed an application for Advance Ruling whether it is required to pay GST on the ‘Complimentary tickets’ for the IPT matches? It contended that the activity of providing complimentary tickets without any consideration on account of business promotion would not fall under definition of supply and, thus, would not be liable to GST.

The Authority for Advance Ruling decided that the activity of assessee of providing complementary cricket match tickets to some persons would be considered as supply of service. Therefore, all tickets supplied by assesse, including complementary tickets, would be taxable and, thus, liable to GST.

The assessee, a registered dealer, purchased goods from consignor in Chennai. While those goods were in transit, goods were detained and consignor paid the tax and penalty and it remitted the amount under the head ‘SGST’ instead of ‘IGST’. The authorities refused to release the goods on the ground that the remittance had to be paid under the head 'IGST'. The assessee filed writ petition.

The assessee submitted that if the remittance was treated as a mistake on the consignor's part, the statute had empowered the authorities to transfer the deposit from one head to another, i.e., from SGST to IGST. However, the authorities submitted that the petitioner had to pay the amount under 'IGST' and then claim a refund from the head 'SGST'.

The High Court observed that the GST Act provides for the refund of the tax paid mistakenly under one head instead of another head. But Rule 4 of the GST Refund Rules speaks of adjustment. It was further observed that if the amount of refund would be completely adjusted against any outstanding demand under the Act, an order giving details of the adjustment to be made in Part A of Form GST RFD-07. Thus, in the case of assessee, GST paid under wrong head by mistake could be adjusted under another head. Therefore, High Court directed that the concerned officials must allow the adjustment and get amount transferred from the head ‘SGST’ to ‘IGST’.

The applicant is engaged in back office administrative and accounting support services, pay-roll processing and maintenance of employee records to overseas clients. It filed an application for advance ruling to determine whether it would constitute an 'export of service'?

The authority observed that the applicant would arrange/facilitate supply of goods or services or both between overseas client and customers of overseas client, therefore, applicant would be clearly covered and would fall in 'intermediary' definition as contained under Section 2(13) of IGST Act, 2017. Therefore, the place of supply in case of services provided by applicant being intermediary would be the location of supplier of services. Hence, services proposed to be rendered by the applicant would not qualify as 'export of services' and, thus, would not to be treated as 'zero rated supplies’.

The 2nd appellant in State 1 purchased a Mini-Cooper car from the 1st appellant who was dealer of motor vehicles in State 2. A temporary registration in the name of the 2nd appellant was taken from State 2 Motor Vehicles Department. The dealer had transported the car in a specially equipped carriage by road. The invoice of purchase of car showed collection of IGST and an invoice was also issued for transportation of the car.

The competent authority issued the order of detention of car on the ground that no e-way bill had been uploaded. The appellant filed the writ petition in the Kerala High Court against such detention order. The Kerala High Court held that the supply of new vehicle by dealer was terminated after the purchase of car in State 2 and subsequent movement of goods to State 1 was not occasioned by supply. There could not be detention for transportation of personal effects for not uploading E-Way Bill. ... See more

1.Calculation of Turnover for Tax Audit u/s 44 AB of Income Tax Act, 1961: • For Assessee in share trading business to give them clear understanding whether they are liable to get their accounts audited for tax audit u/s 44AB of the Income Tax Audit. So, let's check what law dictates about it. 2.Tax Audit Applicability under section 44AB: • An individual who is engaged in business and the annual turnover of his/her business is Rs 1 crore and above. • Determination of turnover u/s 44ab of income tax act,1961, in case of trading of shares either on speculation or non speculation basis • “As per Section 43(5) of the Income Tax Act, 1961, INTRA-DAY TRADING shall be considered as SPECULATIVE BUSINESS TRANSACTIONS and the income therefrom would be either speculation gains or speculation losses. Income from speculation gains is taxed at the normal rates.” • However, Income from trading F&O (both intraday and overnight) on all the exchanges is considered as NON-SPECULATIVE BUSINESS TRANSACTIONS as it has been specifically defined this way. • Income from shorter term equity delivery based trades (held for between 1 day to 1 year) are also best to be considered as non-speculative business income if frequency of such trades executed by you is high or if investing/trading in the markets is your main source of income. 3.Turnover or gross receipts in respect of transactions in shares,securities and derivatives may be determined in the following manner: • As per Para 5 of “Guidance Note on Tax Audit under Section 44AB of the Income Tax Act,1961″ issued by The Institute of Chartered Accountants of India (ICAI): (i)For Speculative Transactions: “The Turnover is net of all positive and negative income from various transaction and not total of all Sales transaction.So if your Net Income > 1 Crores rs., you are liable to tax audit.” 4. Derivatives, Futures And Options (Non- Speculative Transactions) “The turnover in such types of transactions is to be determined as follows: (i) The total of favourable and unfavourable differences shall be taken as turnover.(i.e suppose in 1st transaction you have incurred loss of Rs 65 Lacs and after that you entered in profit transaction in which you have earned Rs 36 lacs, Then as per this guidance note you are liable to tax audit because total of of Profit and Loss a/c exceed Rs 1 Crore) (ii) Premium received on sale of options is also to be included in turnover.(Call or Put Premium paid/received) (iii) In respect of any reverse trades entered, the difference thereon, should also form part of the turnover.” ... See more